At the NAW Executive Summit in January of 2016, Richard Balaban, formerly of Oliver Wyman, contributed a thought provoking presentation entitled, “Future Challenges for Wholesaler-Distributors to Focus on Today.” Early in that presentation he described how the role of the distributor is changing from being “a logistician of product” to becoming “the purveyor of quick and accurate information that make the selection and acquisition of products a seamless process.”
His graphic spoke to a transition from the current state in which manufacturer, distributor and customer function as silos engaging in discrete, manual information transfers, to a future connected state with seamless transfer of information through the supply chain. Thanks to our position in the middle, distributors have the unique opportunity to build and to own the connections that enable delivery of value in the form of a superior customer experience.
The why is best described by Dirk Beveridge, author of the NAW book, INNOVATE! According to Dirk:
“We need to have deeper conversations about the Commoditization of EVERYTHING.
If we are honest with ourselves, most distributors are stuck in a world of sameness. If we were to ask our customers why they buy from us, in most instances the customers can’t articulate a real point of differentiation or an identified value creator that separates one distributor from another.
We live in a world of abundance. A world of choice. A world of suitable options. A world of commoditization. Our customers can get the same thing from someone else. And, in most cases, they can source this same thing at a cheaper price. And, in the age of Amazon, they can get this same thing faster than ever before.
This is due to the commoditization of EVERYTHING . . . products, services, sales, marketing, operations, customer experiences, customer service . . . EVERYTHING! Everything has been commoditized.”
As I pondered the first steps in transitioning our software and processes from “Record Keeping” to “Experience” at Valin Corporation, I realized that we had to begin a data-based dialogue with our suppliers and with our customers. Our data analytics team developed supplier experience scorecards and customer experience scorecards to communicate our respective deficiencies and strengths.
In 2018, we have initiated those data-driven discussions with suppliers and customers. We can identify for suppliers where improvement is needed to meet customer expectations. For suppliers and customers, we can report on how we are creating value for them. We can also communicate the initiatives we are undertaking to improve their experience. We are defining our value in the supply chain and what it is worth.
To be candid, change management is not easy. Some suppliers cling to their products with the belief that the product features and benefits transcend a bad experience. Some customers say “I don’t care, reduce your price,” and now we can respond to them with data discussing critical performance factors that optimize their profitability. Some employees struggle with change and want to cling to the status quo.
However, a growing contingent is beginning to recognize the value we contribute in the process, and, most importantly, recognize how we can collaborate to improve our position in the marketplace with focused initiatives.
The transformation begins with data. Data trumps opinion and emotion, and eventually overcomes resistance to change. Data-driven discussions are the path to achieve the transparency required to provide a superior experience.
I encourage you to start your journey and utilize all the resources that have been developed for you by the NAW Institute for Distribution Excellence. These resources can help you build your scorecards and communicate facts rather than opinion.
In a commoditized environment, the status quo is the enemy! Maintaining the status quo is the easy way to run a business. Don’t be seduced by easy!
And, if you’re looking for more provoking presentations to help you transform your business, be sure to attend the NAW 2019 Executive Summit, January 29–31, 2019, in Washington, DC. Watch for details about this much-valued event coming this month!